AI: Ready or Not?

Speaker 1 [00:00:01] My name is Allen Lau, operating partner at Two Small Fish Ventures. I’m excited about AI because it completely transforms many behaviors. From consumer to enterprise to perhaps industrial, many sectors might not have changed in a century. And now is the time to transform that. I don’t have any huge concern, but if I have to pick one, it’s the pace of the development it’s so fast, this is perhaps the fastest change we have ever seen in human history. In terms of Canada’s preparedness, we have probably the best AI talents in the world. However, as a country, we suck at commercialization and this is something we have to fix.

[00:00:44] My name is Ken Nickerson. I’m a researcher, self-funded, a company called Ibinary. I started about 24 years ago, done roughly 36 companies, a lot in the AI or advanced deep tech space. So in terms of excitement of AI, what’s been interesting is the amount of surprise that the transformer and GPT world has generated. The average person on the street now has an interest in something called artificial intelligence. So is Canada prepared for AI? I would say there’s not a country on the planet that’s prepared for AI. The impact of labour is significant. We know from other countries that when you disenfranchize say 50% of a young male population, you may have secondary effects in political and social systems. The bigger concern, I would say, beyond that is just the trust factor. How can we trust something that has some level of ability to execute, but does not have accountability or authority or responsibility?

Speaker 2 [00:01:45] My name is James Slifierz. I am the CEO and co-founder of Skywatch, one of the world’s leading distributors of satellite data. We work with about 95% of all satellite operators. What I’m most excited about in terms of artificial intelligence is using AI for autonomous space systems. Fundamentally, if humans are going to explore beyond low-Earth orbit, we’re going to need to use machines. We’re going to need to give those machines the ability to make decisions, think, learn and adopt for themselves. I don’t think anybody’s prepared for AI. My broad advice is not to wait for us to be ready. I think we can only learn by doing, and we can’t allow our fear of bad things happening slow us from moving forward.

Speaker 3 [00:02:23] My name is Kiko Wemmer and I’m a general manager at Dandelion Health. I think what I’m most excited about for AI in the health care sector is the opportunity to personalize medicine so that you can optimally decide what is the correct intervention point and what the ideal intervention would be. The second big opportunity is around seeing data differently than the way humans see data, or making linkages between data types that humans can’t make today. With better data sources coming online, I hope that people work to ensure that the data used to train health care algorithms are high fidelity, longitudinal, multi-modal, and representative of the patients who will be beneficiaries of the algorithms that are created.

Speaker 4 [00:03:10] Hi, it’s John here. Those are some of the voices we heard at a recent AI super session held at the University of Toronto’s Creative Destruction Lab. If you haven’t noticed, AI is the hot topic in tech this year, and there was no let up at the CDL event. I think there were more than 500 people who came from around the world to Toronto to explore how AI, and especially generative AI, is transforming everything from health care to education to space exploration. And the message was clear, if you’re not trying to take advantage of gen AI, it’ll be taking advantage of you pretty soon. This is disruptors, an RBC podcast. I’m Sean Stackhouse. We’ve been exploring the theme of AI on Disruptors all year and want to wrap up the season with this special episode focused on AI and what it means for Canada. I’ll be joined shortly by perhaps the most iconic Canadian company, Canadian Tire, to hear what it’s doing. From running its warehouses more efficiently to deploying AI enabled robots to help you the next time you’re looking for tires or a weed whacker. It’s a great story and the sort of innovation that we need to see in every sector in our economy. Unfortunately, we’re not collectively seizing the opportunity. Our economics and thought leadership team here at RBC just put out a new research paper called Gen AI: is Canada Ready? And the answer is a pretty clear no. The bigger question, though, may not be whether we’re ready. It’s what do we need to do and where and how fast. As the paper notes, Gen AI is to steal the movie title everything everywhere, all at once. To come to grips with all that, here are some of the most important points to consider. First, despite boasting renowned capabilities in AI, Canada is a laggard in gen AI implementation and adoption. Second, gen AI has the potential to get Canada’s economy growing again, but only through accelerated innovation and productivity. The challenge is whether businesses and public sector organizations will seize the moment fast enough. Third, we need to play to our strengths in professional services and financial services, as well as health care and education, where the opportunities may be greatest. And lastly, we need to think about the public sector and government itself and how to deploy AI tools to ensure Canadians are getting more bang for their tax buck.

Speaker 1 [00:05:43] I’m Avi Goldfarb. I hold the Rotman Chair in Artificial Intelligence and Healthcare here at Rotman School, of the University of Toronto. The thing that excites me most about AI is that it has potential to transform the way we live in the way we work for the better. What concerns me most is that we won’t have enough of it. Canada is prepared for AI in some ways. We have an amazing research community that is genuinely top of the world. The thing that worries me for Canada is whether we’re going to be able to take that advantage and turn it into something that ends up impacting the economy overall. And I think there’s a real worry with AI, just like with past technologies, that we won’t be the ones to commercialize our own innovations.

Speaker 4 [00:06:27] So what do we do about it? Well, we’ve made a few suggestions. Canada can invest more in education and training to build an AI capable workforce. We can also foster an environment that’s safe for exploration and experimentation. Reliable data will be key. So building an infrastructure of data is critical and governments will be critical too. We need them to take a technologically neutral and risk based approach to legislation. In other words, rational regulatory environments that won’t stifle innovation. You can read more in our report at RBC.com/thoughtleadership or through my social media channels. So check us out on LinkedIn and X. This new AI era is full of risks, but also opportunities. So let’s hear from someone who’s taking on the challenge. Cari Covent runs AI at Canadian Tire. And she seems to be everywhere, tackling everything all at once. Canadian Tire is an iconic retailer and has been in operation for more than 100 years, with approximately 1700 locations across the nation. The brand is so pervasive that most of us live within a 15 minute drive of a Canadian Tire store. Of course, Canadian Tire is about more than just tires. In fact, it’s been about digital technology for years, and Canadian Tire has been on an AI journey for many of those years. So let’s hear more. Cari, welcome to disruptors.

Speaker 3 [00:07:52] Thank you for having me. I’m very excited to be here.

Speaker 4 [00:07:55] When people think of Gene, I suspect Canadian Tire is not the first company that comes to mind. So help us understand what journey Canadian Tire is on with AI.

Speaker 3 [00:08:05] Our journey with AI has been happening for many years, starting with automation, moving into more optimization, operations research, machine learning, and then most recently within generative AI. And our vision really is to use AI as an enabler to transform the way we work. We recognize that we’re at a very pivotal time where the technology is really revolutionizing all facets of how we live and also how we work. And at Canadian Tire, we’re embracing it wholeheartedly.

Speaker 4 [00:08:41] Take us into some of the applications that you’re developing. Let’s start with CeeTee ,your shopping assistant. How does that work for those of us who haven’t used it?

Speaker 3 [00:08:49] CeeTee is our virtual shopping assistant, powered by generative AI that is part of our Canadian Tire mobile app for iOS users. We recognize that purchasing tires is not always an easy decision for many people. A lot of people really don’t understand the details of tires. It’s a technical buying decision. It’s also an expensive purchase. And so far, we’re seeing that it’s understanding the intent of what our customers are asking for. It’s guiding them through their shopping journey from really browsing and asking questions, to ultimately providing a recommendation and giving them an opportunity to purchase the tires. It’s also nudging them so when they are sort of pausing, perhaps thinking about something, it has the ability to be able to predict the next words or the intent of what the customer is asking for, and then it’s able to generate content, and it’s able to generate recommendations that help the customer ultimately make a decision.

Speaker 4 [00:10:00] Let me ask about how consumers are adjusting to this, and it’s probably still early days, but how is consumer behavior and your interaction with consumers evolving as AI plays a greater role in the customer journey?

Speaker 3 [00:10:14] So early days on CeeTee in particular, we are seeing signals that the consumers really like it. They’re enjoying the interaction. We’re able to do analytics on patterns of the conversation as well as the types of questions that they’re asking. And so that’s valuable to us, but it’s also really valuable to our consumers. The other thing that we’re seeing that we’re really excited about is because we’re able to digitize and capture this data in a way that we have never been able to before, we’re now able to use that to inform other decisions on personalization, for example, or recommendations. And also eventually it will feed back into informing our merchandizing and what products we buy and how we go to market with those products. So we’re really excited about that.

Speaker 4 [00:11:13] What about employees? I’m wondering how Gen AI has affected their experience and even changed how people are carrying out their day to day work?

Speaker 3 [00:11:22] Well, it’s been interesting. One of the things that we did in early 2023 is we recognized that ChatGPT as a very consumable chat bot, is going to change the way that people work and also going to be used. And so what we did out of the gate was we created our own version of that chat CTC. And with over the last 6 to 8 months provided tons of opportunities to thousands of our employees. And they’re using it daily. So they’re using it to generate content, for example, for marketing campaigns. They’re using it for code generation, like how do I write this function in Python or in Excel? They’re using it to upload and talk. So summarizing and reducing text to create concise and informative descriptions of the upload. So for example, we might drop in a series of financial reports and then it could focus on financial performance analytics and KPIs. But it also can provide insights and strategies to improve financial performance. I’d say the most effectively what we’re doing is we’re scaling AI literacy training, helping people to understand what it is and what it isn’t, and how it actually is there to help the humans. So if we think about humans in the centre of it all our employees and our customers in particular. And we’re also using the AI literacy training to teach people how to do prompt engineering, because we recognize that the days of needing certain degrees to do some of this are no longer required. And we see the value of AI, generative AI in particular, being scaled into the hands of our business and really empowering them to start to change how they work.

Speaker 4 [00:13:19] You’ve talked Cari about how AI helps consumers and how AI helps employees. It also has a role in terms of the store. What if you can give us a bit of a sense of the role AI is playing in the way stores are run?

Speaker 3 [00:13:34] Yeah, I can give you a specific example, John, that we’re pretty proud of. So about a year and a half ago, we launched a product that we built called Tetris, and it uses operation research to solve for what historically is a very large retail problem, not just a Canadian Tire problem. And that is what products to place on what shelf at what time. The objective was to make what was traditionally kind of a national level planogram, and think of a planogram as the game Tetris, where all the products to fit together perfectly in a very constrained space. We wanted to make it store specific based on specific sizes of shelves in that store. How many weeks of inventory that store might have. The supplier agreements on the placement of those products, as well as the local customer demand. We started rolling it out in 2023, and we’re continuing to work with our dealer community, getting feedback on how to make it better. So it’s continuing to evolve, but we’ve rolled it out to about half of the network, and we’re seeing a savings in hours related to setting up the shelves, as well as creating the planograms as well as an increase in sales. So we’re seeing great signals that this is actually working.

Speaker 4 [00:15:00] You’re also doing some really interesting work with robots and robotics within stores. You’ve partnered with sanctuary AI, which we’ve profiled on previous episodes of Disruptors. Can you tell us a bit more about what you’re doing with robots and where you see that initiative going.

Speaker 3 [00:15:16] Sure. I think the first point on that is that the labour shortage for us is an issue. We can’t get people quickly enough to work in our stores and work in our distribution centres. And so in late 2019, we were introduced to Sanctuary, and we understood what a general purpose robot could do for both our store labour as well as our distribution centres. And we decided that it was an amazing opportunity for us to to work alongside Sanctuary in the research and development by providing them with use cases specific to certain manual store tasks, as well as distribution centre tasks. We agreed to test them out in our stores, and in the future we’ll be testing them out in our distribution centres. So we provided a live lab for this type of work. Not only did they replicate our store in their own lab, but we provided this live lab and it was incredible to see our employees getting excited to work alongside a robot and interacting with it, and also understanding the value that the robots could do, which would ultimately free them up to be able to focus on customers. It also gave us a chance to do some really interesting qualitative testing with a small customer base, so that we could get feedback on their interaction with the robot, how they felt about it, and how these robots could actually inform their decisions to continue to shop at our stores.

Speaker 4 [00:16:57] What are these robots doing in the stores?

Speaker 3 [00:16:59] In the stores, they’ve been trained to do tasks like picking products and then packing them to service e-commerce orders would be one example. Another example would be when the store closes, the robots can be roaming through the aisles. They can be placing products on the shelves. It can hang clothes up. It can take products that were returned, it can scan them so that we know that they’re back in the system. They can clean washrooms. So these robots are general purpose, and the value that they have is they’re not just there to do picking and packing. For example, they can rotate from one task to the next, freeing up the people to do much more meaningful work, create meaningful experiences for our customers. But overnight, the robot can continue to do work that the people wouldn’t be doing.

Speaker 4 [00:17:56] This is all very well and good now for things like cleaning washrooms. Probably something most employees don’t want to do, but do they wonder if this is going to continue to evolve and take on some of those higher functions? And how does that change the future of work?

Speaker 3 [00:18:11] I think everyone wonders that. So the anecdotes that we heard from our employees, for example, is there are tasks that they don’t want to do. And if a robot can do that, they will have a much more satisfied experience at work. In terms of the robots being able to replace the humans, I personally don’t see a day where the robots are going to take on the relationships that we put so much focus on with our customers and take over that, so there’s always going to be places for humans. And what we’re seeing in the early days is there are new roles that will be created as a result of that. So, for example, in our distribution centres, we will need people to manage the robots. That’s a job that just doesn’t exist today. So that critical thinking and judgment continues to be a main part of where we’re continuing to focus on the people labour side of our business.

Speaker 4 [00:19:18] All of this, whether it’s for the consumer or the employee or the way you run your stores, rests on trust. And I imagine Canadian Tire is one of the most trusted companies in Canada. It should be more than 100 years old. How do you ensure that the trust you’ve built up over that century or more, continues but is even enhanced through these transformations, where in different situations, trusts can be in play?

Speaker 3 [00:19:44] Yeah. Our brand is our most important asset that we have, so we take trust very seriously. We take our customer data and privacy very seriously. And so as this artificial intelligence continues to evolve, we have built and integrated a strong, responsible AI framework. The other area that we’re focused on is this idea of AI literacy, similar to cybersecurity. We know that many of the risks start with a lack of employee awareness. And so as part of the AI literacy training, not only are we demystifying AI, but we’re also teaching them about responsible AI and ensuring that they recognize that it’s everyone’s responsibility and accountability. Because there is still a lack of AI regulation here in Canada. We’re using the guidelines that are proposed as part of the Artificial Intelligence Data Act, the code of conduct, and we’re cross-referencing with that to ensure that as these guidelines actually get cemented in policy and regulation, that we’re ahead of it. And then finally, we work really closely with our audit teams, with our privacy and our risk office. And they are in this every step of the way. We don’t do anything without them.

Speaker 4 [00:21:10] Those are great messages for pretty much any organization, but to invest in your employees and secure their buy in has to be a critical component of any roll out. Cari, how do you achieve that in an organization as large and complex as yours?

Speaker 3 [00:21:24] Yeah. What I’m finding is that communication is constant and critical to the success of getting the buy in. So whether it’s bringing hundreds and thousands of people together to do lunch and learns, or whether it’s a conference where we have employees that come talk about artificial intelligence and the opportunity ahead, doing board of directors education, educating our senior leadership. It really comes down to humanizing artificial intelligence and really broadcasting the story and getting people as excited about it as we are. And the only way to do that is to make sure that the people understand it and are at the centre of it.

Speaker 4 [00:22:21] Cari, this has been such a great conversation, fascinating on so many levels, and it’s wonderful to be seeing one of Canada’s most iconic companies, Canadian Tire, continue to transform the retail experience. And I wonder if I can ask you as a last question, where do you see AI going over the next few years and particularly how it will continue to transform your business?

Speaker 3 [00:22:44] Well, there’s a few different areas. We’re going to continue to collect and use our data, and we’re going to partner with other data providers. And then we’re going to use that to advance our AI capabilities to drive relevant and meaningful customer experiences. But those experiences will change in the future. And although machines end up doing some of the work on the background, it will feel even more personal and relevant than it’s ever felt. We see the digital and the physical world become one as a result of AI, and really, this will facilitate the opportunity for people to connect with Canadian Tire in a way that they want to. And this becomes the foundation for personalization and how people want to shop. I believe that AI will be embedded into everything we do, and we are really excited to be on the highway of AI and really using it to accelerate how we evolve our business.

Speaker 4 [00:23:56] What a great message to end on that AI is going to be critical to every organization in terms of accelerating the way that we build strategies and build our businesses. Cari, thank you for being on Disruptors. This was the year that artificial intelligence got wings and the tech is truly taking off. You can hear more about it over the summer as we play some of our favourite episodes from the past season. And join us again in the fall for a new season in which AI will again be at the centre of Disruptors. Before we sign off with the summer, I’d like to thank you, our listeners, for joining us on our journey this year. We hit more than 1.5 million downloads, with thousands of new listeners each month, and we won Best Tech Podcast of the year. So whether you’re listening to this with your first cup of coffee or during your commute, while you drive, or even in the air on your Air Canada flight, thanks for joining us this season on Disruptors. And if you like what you’re hearing, please rate, subscribe and share our show. We’ll be back in the fall to speak with more Disruptors who are leading the way and helping us prepare for a brave new world. But until then, have a great summer. I’m John Stackhouse, and this is Disruptors, an RBC podcast.

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